Stalled Greek talks unnerve investors

Investors were again rattled by the euro zone’s debt crisis overnight, after the Greek sharemarket plunged on fears that its government could fail to reach an agreement with international creditors.

The Athens bourse dropped 6.3 per cent, wiping out most of the gains it has achieved since September.

Shares in the National Bank of Greece – the country’s second largest bank – dropped 17 per cent, while Piraeus Bank, the fourth, suffered a 19 per cent decline. Eurobank fell 15 per cent, while Alpha was down 14 per cent.

The sell-off in bank shares came after a meeting between Greek Finance Minister Yannis Stournaras, and the head of the Hellenic Banks Association to discuss recapitalisation of the Greek banks.

This process has been pushed back because the Greek government has yet to reach agreement with the “troika" – officials from the European Union, the European Central Bank and the International Monetary Fund – over the budget cuts and labour market reforms that Greece needs to introduce to receive its next €31.5 billion instalment of aid money.

The delay will mean that the banks will not announce their half-yearly results until the end of November.

Previously the deadline for the banks to report their results had been pushed back to October 31.

Greek banks have also been told they will not be able to swap their Greek bonds for bonds issued by the euro zone’s bailout fund.

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Greek banks needs billions in extra capital after the country embarked on a massive restructuring of the €200 billion it owed to private creditors in February.

The deal in effect wiped out the capital base of the country’s four top banks.

Under the troika’s plans, the Greek banks will receive a total of €50 billion in fresh capital.

Of this, €25 billion was released in May, and a large portion of the next €31.5 billion in aid money will go towards recapitalising the banks.

But negotiations between the Greek government and the “troika" have stalled.

The troika is demanding that Greece take additional steps to make its labour market more flexible, but this is being staunchly resisted by the Democratic Left, a small party that makes up the fragile coalition of the conservative Prime Minister, Antonis Samaras.

Meanwhile, the editor of Greek weekly magazine Hot Doc will appear in court on Thursday after being charged for publishing the names of about 2000 Greeks – including businessmen, surgeons, dentists and a former government minister – said to hold accounts at an HSBC branch in Switzerland.

The editor, Costas Vaxevanis, defended his actions, saying that politicians and officials had shrugged off their responsibilities to investigate possible tax avoidance.

The list in Hot Doc reportedly matches the once sent by Christine Lagarde, who was then the French finance minister, to her Greek counterpart George Papaconstantinou in 2010.

The reluctance of Greek authorities to pursue tax evaders has enraged the country’s international creditors, and is also a sensitive subject for ordinary Greeks, who have suffered deep cuts in salaries and pensions.